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Chemical Plants Flock to Louisiana for Cheap Natural Gas

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With a hundred chemical plants and seventeen oil refineries, Louisiana wrestles with pollution, and that's aside from any havoc wreaked by the BP spill. The state has attracted some cleaner industries recently, but after natural gas prices dropped to ten-year lows this spring, chemical manufacturers are rushing to build and expand. Residents need those jobs but fear explosions and toxic emissions.

"The number of plants coming our way, either for sure or probably based on feasibility studies, is pretty darn substantial," said Loren Scott, emeritus economics professor at Louisiana State University. "We're getting a bigger slice of the chemical pie because natural gas is cheap here while it's still expensive in Europe." Natural gas is around $2.30 per million BTU on the New York Mercantile Exchange now, down from nearly $16.00 in 2005.

Don Briggs, president of the Louisiana Oil and Gas Association, said new methods of extracting gas from Haynesville shale -- located in northwestern Louisiana, eastern Texas and southwestern Arkansas -- revolutionized drilling. In the Haynesville play, wells are drilled down to reach shale formations, and then the drill bit is turned and the well is extended laterally into rock. After that, hydraulic fracturing or fracking occurs. Water, sand and chemicals are pumped into the well to break the rock apart and release gas. Briggs said the process was a technology leap that he likened to astronauts landing on the moon.

With a nonstop supply of gas from fracking, manufacturers are hurrying to build chemical plants in Louisiana. They'll use the gas for fuel and as building blocks for their products, and they expect to benefit from a network of gas pipelines and the Mississippi River's infrastructure. State-run Louisiana Economic Development is icing the cake with property and payroll tax credits and other incentives to companies building plants.

Scott named some of the many plants interested in locating here. Sasol in South Africa is considering a $4.5 billion ethylene complex in southwest Louisiana that would come on stream in four years. Methanex in Canada wants to build a methanol plant in Geismar in Ascension Parish. Last year, SNF Flopam opened a specialty chemicals plant in Iberville Parish that could provide more than 500 jobs by 2015. Royal Dutch Shell might build a giant plant, converting natural gas into diesel fuel, in Louisiana.

Dyno Nobel International, based in Utah, would like to build an $800 million ammonia plant on the Westbank of Jefferson Parish near New Orleans. Nalco Company, the maker of Corexit used to disperse oil from the BP spill, is building a polymer facility in St. John the Baptist Parish upriver from New Orleans. Average pay at most of these facilities is projected at $57,000 or $58,000 a year, plus benefits.

Other types of manufacturers have been lured here by cheap natural gas. In St. James Parish, Nucor is building a pig iron plant, with plans for a much bigger steel complex there. But Zen-Noh Grain Corp., which owns a nearby export terminal, filed lawsuits in April claiming the steel plant would spout carcinogens.

Scott said Louisiana plants have an advantage over European producers in making ethylene, a chemical used in plastics. "Europe has lots of shale but France and Bulgaria have outlawed fracking, and several other European nations oppose it," he said. European manufacturers make ethylene from crude oil, which is more expensive than natural gas. It costs almost twice as much to churn out ethylene from crude in Europe now as it does to make it from Louisiana's gas.

Briggs said, "Haynesville is the largest shale deposit in the country, and we've known about it for a long time." The rush to buy and drill land in the Shreveport-Bossier City area got underway in 2006 and 2007. "We've always had natural gas but now we have abundant, long-term supplies," he said. "Overnight we created a supply that's so immense we no longer need to import gas and are preparing to export it. Business can count on ample supplies."

Natural gas producers aren't happy about the recent drop in prices, however, and some operators have reduced output. Briggs said, "Next year, gas might be up at $5.00 again," but he doubts prices will return to their 2005 levels anytime soon.

Looking overseas, Scott warned that European nations might eventually soften their opposition to fracking, maybe out of necessity. In that case, prices there would drop.

Meanwhile, Louisiana residents worry about accidents. On March 22, Westlake's PVC chemical plant in Geismar, 25 miles south of Baton Rouge, exploded and released vinyl chloride, chlorine and hydrochloric acid into the air. Roads and a long stretch of the Mississippi River were closed for awhile. A lawsuit on behalf of neighbors was filed against the company.

The nonprofit Louisiana Bucket Brigade and the Washington, D.C.-based Environmental Integrity Project coauthored letters last Dec. 14 and again on May 17 of this year, asking the U.S. Environmental Protection Agency to revoke the DEQ's authority to manage the Clean Air Act program. They cited frequent, petrochemical plant accidents. "Each of these accidents releases enormous amounts of hazardous pollution that pose risks to the health and safety of the communities we advocate for," the May 17 letter said. The groups faulted DEQ for air-monitoring teams reaching accidents too late, not sharing information about accident monitoring on a timely basis, providing data that isn't transparent or comprehensible, and not surveying people for chemical exposure.

According to the May 17 letter, "when Louisiana does take enforcement actions, the penalties are little more than a slap on the wrist. In 2010, the average penalty for a Clean Air Act violation in Louisiana was $1,329.86, the second lowest in the nation." In Texas, the average penalty for a violation in 2010 was much greater at $26,620.

When asked about those letters last week, EPA spokesman David Bary in Dallas said his agency's position is that "the EPA has delegated authority to the DEQ to administer and enforce the federal Clean Air Act. Through annual EPA audit and review processes, the EPA remains confident that DEQ will continue to ensure the protection of public health and the environment throughout Louisiana." In other words, EPA will continue to work with DEQ.

In the last two decades, DEQ has gotten tougher on chemical companies. In the early 1990s, Sixty Minutes, The Oprah Winfrey Show and other TV network programs drew attention to health threats from Louisiana's chemical plants. In 1995, DEQ demanded that chemical producers improve safety procedures and accident responses and inform the public about incidents. In 2005, DEQ installed additional air monitoring equipment at 15 chemical plants and refineries in the Baton Rouge area, and found that their emissions contributed to ozone.

As a government agency, DEQ has to accept the cards it's been dealt. Decisions about making errant plants pay bigger fines, Texas style, lie with Governor Jindal's office and the Louisiana legislature.

DEQ spokesman Rodney Mallett said last week "DEQ responds to more than 10,000 calls from citizens and industry a year. Each one is investigated." Federal and state programs rely in part on self-reporting by industry. "Most of industry wants to comply with environmental regulations," Mallett said. "They live and work in the same areas."

He explained how DEQ responds to an incident, and said with eight regional offices, DEQ dispatches emergency responders and technicians from the closest office. "As soon as DEQ arrives, we conduct air or water monitoring" and consult with local authorities, he said.

Mallett continued, saying "many times, the responders who receive the 9-1-1 call, such as the state police or local fire departments, also conduct air monitoring, as does the facility itself. Parish and city emergency responders make decisions about how to protect people with evacuations or shelters-in-place."

He said all of DEQ's accident information is available online or by request at deq.louisiana.gov.

The Louisiana Bucket Brigade and other environmental groups want state government to do more, however. "If people believe the DEQ statements that these accidents pose no danger to the public, then they make decisions -- like buying a house next to a refinery or sending their kids to school near a chemical plant -- due to a false sense of safety," LABB said in its May 17 letter to EPA.

To help people make decisions about moving and vacations, the EPA has a tool called AirCompare. Louisiana's St. Bernard Parish -- home to Chalmette Refining, a Valero refinery and a Domino Sugar plant -- topped the Gulf's worst air list in 2011 with 77 unhealthy air days for those with asthma or lung disease. Next was Harris County, Texas with 32 bad air days.

A choking-air day in Louisiana can make you wish it were only a bad hair day. Bossier Parish had 17 lung-threatening air days last year. East Baton Rouge had seven, West Baton Rouge had three, while Orleans and Jefferson Parishes had two each.

Meanwhile, many chemical companies have decided they'd rather be safe than sorry. Edward Flynn, vice president for health and safety at the Louisiana Chemical Association, said "today there's more emphasis on process safety, in addition to the existing emphasis on worker safety." The current approach is more proactive and preventive than it was. "Plants want to have good systems and procedures in place to make sure everything is running properly," he said. "They're now looking at leading indicators for safety, not just lagging indicators -- like how an accident happened."

Since 2006, U.S. natural gas production has grown by more than 25 percent, mainly because of horizontal drilling combined with fracking. Don Briggs said that process is safe but communities worry about aquifer contamination and the possibility of earthquakes.

For more on what your community can do to protect itself from chemical plants and fracking, take a look at LABB's website at labucketbrigade.org and the Louisiana Environmental Action Network's site at leanweb.org.

This article was published in "The Louisiana Weekly" in the June 11, 2012 issue.

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